Global Cement News

Congratulations are in order for CalPortland. It celebrates its 125th anniversary or quasquicentennial today. According to the company blurb on the website, a cement plant was established in 1891 in Colton, California. This was the first plant west of the Rockies and it went on to supply building materials towards the development of Los Angeles. However, the website doesn’t exactly shout about its purchase in 1990 by one of the Japanese companies that eventually became Taiheiyo Cement. Its earliest constituent company, the Cement Manufacturing Company, was established 10 years earlier than CalPortland in 1881. So perhaps CalPortland could celebrate the 135th anniversary of its Japanese owners at some point this year too.

Table 1: Age of leading cement companies by production capacity: Source: The Top 100 Report 2016, Global Cement Directory 2016, company websites, Wikipedia

As can be seen from Table 1, a list of major cement producers by production capacity in 2016, most of the European or non-Chinese multinationals are old. They have roots in various predecessor companies going back at least a century. By contrast most of the Chinese producers on this list are far younger having been established since the 1980s.

Table 2: Age of selected older cement companies still in business: Source: Company websites.

Table 2 adds an international perspective from the cement industry to CalPortland’s achievement. It’s an arbitrary list chosen from larger, mostly multinational cement producers that still operate today. As such it may well be missing some key names. However, they all follow the first industrial revolution innovators in cement such as John Smeaton, Joseph Aspdin or Louis Vicat. A generation later the first cement companies that have endured to the present in some form or another such as Lafarge, Vicat or Dyckerhoff started to appear. As impressive as the longevity of these companies are though, they pale in comparison to Saint-Gobain, the French construction materials company that was first established in 1665.

A BBC News article on company lifespans found that the average lifespan of a company listed in the S&P 500 index of leading US companies had decreased from 67 years in the 1920s to 15 years in 2012, according to research by Professor Richard Foster of Yale University [LINK]. By this measure most of the cement companies examined here are doing well. Yet, most of the older ones have endured such a tangle of mergers, acquisitions and changes that it is debatable whether any of them could be considered the same company as their originator. Joseph-Auguste Pavin de Lafarge may have started his operations at Teil in the Ardèche region of France in 1833 but LafargeHolcim, its modern day successor, is only one year old following its creation from Lafarge and Holcim in 2015.

This leads to the Ship of Theseus' paradox or the thought experiment regarding whether an object that has all of its parts replaced is still the same object. Just as humans gradually have most of their constituent parts (or cells) replaced over time so too do long-lasting companies. One superficial response is to point out that memory or heritage can have a lasting effect for individual, national and corporate entities. Just compare, for example, the different outlook of western European national states with millennia of continuation to much newer nations in the Americas. European countries, like the UK, are often seen as being old and stuffy compared to new world dynamism despite all the citizens in both regions being younger than their countries.

To end on a cementitious note, perhaps this dilemma should be renamed the Kiln of Theseus paradox for the cement industry. If a cement plant’s engineers replace all the parts of a cement kiln is it still the same kiln? The suspicion is that the staff at CalPortland would definitely think it is!

If any readers have a suggested name for a 135th anniversary This email address is being protected from spambots. You need JavaScript enabled to view it.

Italy: Cementir has appointed Paolo Bossi as the chief executive officer of Cementir Italia, Cementir Sacci and Betontir. The new appointment follows Cementir’s acquisition of Sacci and is the start of a rationalisation process of the Cementir group in Italy, according to a company statement.

Tensions have boiled over regarding imports of cement to Kenya in recent weeks as different importers have received opprobrium in the local press. Last week Dangote Cement was attacked for importing cheap cement into the country from Ethiopia, allegedly off the back of a cheap electricity deal. This week, Chinese imports have been in the firing line, following data reportedly seen by the Business Daily newspaper that showed that the value of Chinese cement imports rose tenfold year-on-year in the first half of 2016.

At the heart of these rows lies a strong demand for cement: Kenya had a cement production utilisation rate of 90% in 2015 according to Kenya National Bureau of Statistics (KNBS) data. It produced 6.35Mt in that year and used 5.71Mt for consumption and stocks. Its utilisation rate has been rising steadily since 2012. It was 93% for the first six months of 2016.

Unfortunately for the local producers this kind of demand attracts competition from within and without. Nigeria’s Dangote Cement is planning to build a 3Mt/yr plant at Kitui and Cemtech Kenya, a subsidiary of India’s Sanghi Group, is planning to build a 1.2Mt/yr plant at Pakot.

Local producer ARM Cement reported both falling turnover and a loss for the first half of 2016. It blamed this on increased competition in Tanzania. However, in 2015 it increased its turnover in Kenya by importing clinker over the border from its new Tanga plant in Tanzania. It also noted a ‘competitive landscape’ in Kenya and lamented the effects of currency devaluation on its financies as a whole. East African Portland Cement had a tougher time of it for its half-year that ended on 31 December 2015, issuing a profit warning of a loss and expected reduced profits despite a rise of 12% in sales revenue. By contrast, Bamburi Cement, LafargeHolcim’s subsidiary, reported both increases in revenue and operating profit in 2015. Although it too noted problems with interest rates and currency depreciation in the country during this period.

The focus on Chinese imports follows Chinese contractors winning some of the biggest infrastructure projects in the country. The China Rail & Bridge Corporation (CRBC), for example, is building a railway between Mombasa and Nairobi. The Business Daily newspaper has found data showing that Chinese cement imports worth US$19.8m to Kenya in the first half of 2016 compared to US$1.99m in the same period of 2015. The background to this is that China has more than doubled the value of all of its imports to Kenya since 2011 according to the KNBS. Total import volumes of clinker from all foreign countries increased by 51% in 2015 from 1.31Mt in 2014, the largest increase in at least five years.

If local cement producers are being locked out of supplying these kind of deals no wonder they are getting angry. However, another angle on what’s happening here might be that local producers who are suffering from increased competition, falling prices and a precarious national financial situation are lashing out at the easiest target. The local press doesn’t appear to have criticised ARM Cement for moving its Tanzanian clinker north of the border for example. Likewise, a Bamburi Cement spokesperson previously said that the producer had supplied 300,000t of cement to the rail project since September 2014, earning it nearly US$10m. Kenya needs cement as it builds its infrastructure. Fortunes will be made and tempers will be lost as it does so.

UK: John King Chains has appointed John Wilson as its Chain Division Account Manager. Wilson is a production engineer with 20 years of business development. He brings practical understanding of engineering processes and experience with leading Conveyor Chain manufacturers to the company.

US: Ash Grove Cement has appointed Chengqing (Cheng) Qi as its technical centre director at the company’s headquarters in Overland Park, Kansas. In his new role, Qi will oversee operations of the company’s technical centre. Greg Barger, an American Concrete Institute (ACI) Fellow and Ash Grove’s long-time technical centre director, will retire in 2017. Barger will continue in this role and work alongside Qi until the transition is complete.

Most recently Qi served as technical manager for a cement manufacturer where he was responsible for troubleshooting cement, concrete and aggregate performance, testing materials and evaluating new material sources. Prior to that, he was with Professional Service Industries in Fairfax, Virginia, as a materials engineer and petrographer.

Qi has authored or contributed to more than 20 technical papers in peer-reviewed journals and conference proceedings. He is a member of multiple technical committees for the ACI and ASTM International.

Qi holds a doctorate in civil engineering, with an emphasis on cement and concrete materials, from Purdue University’s School of Civil Engineering in West Lafayette, Indiana, and bachelor’s and master’s degrees in materials science and engineering from Southeast University in Nanjing, China.